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FOR: Tier Technologies, Inc.
0000 Xxxxx Xxxxxxxxx
Xxxxx 000
Xxxxxx Xxxxx, XX 00000
Official Payments Corporation
Three Landmark Square
Stamford, CT 06901
CONTACT: Xxxxx X. Xxxxxxx, CEO, Tier Technologies
000-000-0000
Xxxxx Xxxxxx/Xxxxx Xxxxx
Xxxxxx-Xxxxx Associates
212-850-5600
Xxxxxxxx Xxxxx, VP, Official Payments
000-000-0000
Xxxxxxxxx Xxxxxx, Publicist
000-000-0000
TIER SIGNS AGREEMENT TO ACQUIRE OFFICIAL PAYMENTS CORPORATION
Expands Tier's Transaction Processing Business and Adds 1,200 Government Clients
Acquisition Expected to Be Accretive on a Pro Forma Basis for First Twelve Months
Tier Updates Fiscal 2002 and 2003 Guidance To Give Effect to the Acquisition
Walnut Creek, CA and Stamford, CT-May 31, 2002-Tier Technologies, Inc.
(Nasdaq: TIER) announced that it has entered into an agreement to acquire
Official Payments Corporation (Nasdaq: OPAY), the country's leading
provider of electronic payment options for more than 1,200 government
entities. Official Payments reported revenue of approximately $32 million
for the twelve month period ended March 31, 2002.
Official Payments currently provides payment systems for 21 states and
1,200 counties and municipalities across the country. During calendar year
2001, Official Payments processed more than one million transactions
totaling over $1.2 billion in tax and fee payments, and is a primary credit
card payment partner of the Internal Revenue Service (IRS). Official
Payments is currently the only company to offer consumers the ability to
make integrated federal, state and local tax payments. The company's
services enable consumers to pay their government taxes, fees, fines and
utility bills by credit card, via the Internet and by telephone.
The all-cash transaction is structured as a $3.00 per share cash tender
offer and is expected to commence within the next two weeks. Tier
anticipates a purchase price of approximately $74.5 million, excluding
acquisition-related costs. The parties expect the transaction to be
completed by early August 2002.
"The acquisition of Official Payments is very synergistic with Tier," said
Xxxxx X. Xxxxxxx, Tier's Chairman and Chief Executive Officer. "It adds
1,200 state and local government clients, a new major contract with the
IRS, a proven proprietary platform and a state-of-the-art data center to
our business. Equally important, the acquisition brings our transaction
processing business to a new level by adding new revenue streams from state
and local taxes, fees, fines, utility payments and more. We also see an
opportunity to pursue similar electronic transaction payment processing
business in other commercial areas such as tuition and utility payment
processing. In addition, Tier expects to offer Official Payments' clients
the benefit of Tier's consulting expertise in systems design and
development and other transaction-based financial consulting services which
Official Payments previously could not offer," he commented.
"By joining forces with Tier, we believe that Official Payments gains the
ability to move to a new level of revenue and earnings growth," said Xxxxxx
X. Xxxxx, Chairman and Chief Executive Officer of Official Payments. "Tier
can leverage Official Payments' outstanding technology platform and our
in-depth knowledge of electronic payment options across many of Tier's
vertical markets. As the credit card payment provider for seven of the 10
largest tax collecting entities in the U.S., Official Payments has set the
standard in efficient electronic collections, and this experience can be
brought to many of Tier's existing clients whom we currently do not serve,"
he noted.
It is expected that Tier will retain the Official Payments brand, as well
as its existing sales, marketing, engineering and customer service
operations and data center.
In addition to building upon Tier's existing strengths in the state and
local government markets, Official Payments brings Tier a new line of
federal business. Official Payments began providing its services to the IRS
for the payment of individual income taxes in 1999. This month, Official
Payments announced that the IRS had awarded the company a new contract to
collect and process individual income tax payments by credit card. The
contract authorizes Official Payments to provide a service enabling
taxpayers to make a variety of personal income tax payments with their
Visa, American Express, MasterCard and Discover credit cards. In calendar
year 2001, the Internet and telephone payment services operated by Official
Payments successfully processed more than 225,000 federal tax payments
totaling nearly $800 million, representing an 87% market share of credit
card payments made to the IRS.
Pursuant to the agreement announced today, a wholly-owned subsidiary of
Tier has agreed to commence a cash tender offer to acquire all the
outstanding shares of Official Payments common stock. It is expected that
all shares not purchased in the tender offer will be converted into the
right to receive $3.00 per share in a second-step merger following the
tender offer. The transaction, which has been approved by both companies'
boards of directors, is contingent upon the tender of at least a majority
of the Official Payments shares on a fully diluted basis, excluding options
not exercisable at the time the tender offer is consummated, and certain
other regulatory and closing conditions. As part of the agreement, Tier has
support letters from shareholders representing approximately 63% of the
current outstanding stock of Official Payments.
OUTLOOK
Xxxxx X. Xxxxxxx, Tier's Chairman and Chief Executive Officer, commented:
"Excluding the amortization of acquired intangibles and certain transition
and integration costs, Tier expects the acquisition of Official Payments to
be accretive for the first twelve months following the close of the
acquisition on a pro forma diluted earnings per share basis.
Assuming an August 1, 2002 closing date, we expect that Official Payments
will have approximately $45 million in cash and short-term investments.
Excluding the impact of certain transition and integration costs associated
with the acquisition which we have estimated to be approximately $800,000,
and excluding the amortization of acquired intangibles, we expect Official
Payments will generate a pro forma net loss of approximately $0.01 per
diluted share for the quarter ending September 30, 2002. For the quarter
ending September 30, 2002, we expect Official Payments to contribute an
additional $3 million in revenue for Tier.
As a result of this acquisition, we now expect that revenue for Tier's
fourth fiscal quarter will be between $32 and $33 million and that pro
forma earnings per share from continuing operations, excluding the
amortization of acquired intangibles and the transition and integration
costs referred to above, will be between $0.22 and $0.23 per diluted share
for the fourth fiscal quarter.
And for our fiscal year ending September 30, 2003, factoring in the effect
of the acquisition, we now expect revenues to be in the range of $165 to
$170 million, and pro forma diluted earnings per share from continuing
operations to increase to approximately $1.05 per diluted share," he said.
The tender offer described in this announcement for the outstanding shares
of Official Payments has not yet commenced, and this announcement is
neither an offer to purchase nor a solicitation of an offer to sell
securities. The tender offer will be made only through the Offer to
Purchase and the related Letter of Transmittal. We urge investors and
security holders to read the following documents, when they become
available, regarding the tender offer and merger (described above), because
they will contain important information:
o Tier's Tender Offer Statement on Schedule TO, including
the Offer to Purchase, Letter of Transmittal and Notice
of Guaranteed Delivery
o Official Payments' Solicitation/Recommendation Statement
on Schedule 14D-9.
These documents and amendments to these documents will be filed with the
Securities and Exchange Commission when the tender offer commences. When
these and other documents are filed with the SEC, they may be obtained for
free at the SEC's web site at xxx.xxx.xxx. You may also obtain for free
each of these documents, when available, from the Information Agent for the
offer, to be announced.
Tier's management will host a conference call on Friday, May 31, 2002, at
9:00 a.m. (Eastern), to discuss the agreement.
To access the conference call, please call 000-000-0000. The conference
call will also be broadcast live via the Internet at xxx.xxxx.xxx. Please
go to the website at least 15 minutes prior to the call to register,
download and install any necessary audio software. For those who cannot
access the live broadcast, a replay will be available on the website at
xxx.xxxx.xxx or by calling 000-000-0000 and entering "4382911" from two
hours after the end of the call until 11:59 p.m. (Eastern), June 7, 2002.
ABOUT TIER
Tier is a vertically-focused consulting firm that provides business and
information technology consulting, systems design and integration,
transaction processing, business process outsourcing and business process
reengineering for its clients primarily in the state and local government,
healthcare, insurance and utilities markets. Tier brings specific industry
knowledge, proven delivery capability and proprietary applications to its
client relationships. The combination of domain expertise and technical
capability allow Tier to provide solutions that link increased operating
efficiencies with systems and technology improvements. Tier serves Fortune
1000 companies and government entities.
ABOUT OFFICAL PAYMENTS CORPORATION
Founded in 1996, Official Payments Corporation (Nasdaq: OPAY) has
agreements to collect and process credit card payments with the IRS, 21
state governments (AL, AR, CA, CT, IL, IN, IA, KS, MD, MN, MS, NJ, NY, OH,
OK, PA, RI, VA, WA, WI, and WV), the District of Columbia, and more than
1,200 counties and municipalities. The company's principal business is
enabling consumers to pay their government taxes, fees, fines, and utility
bills by credit card, via Internet and telephone. In 2001, Official
Payments collected and processed more than one million transactions
totaling $1.2 billion in federal, state and local government payments.
Tier Technologies Safe Harbor Statement
Certain statements in this press release, including statements under the
heading "Outlook" and other statements using the terms "expected," "will,"
"plans" and other words of similar meaning, are forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933 and Section
21E of the Securities Exchange Act of 1934. Such forward-looking statements
include, but are not limited to, statements regarding the proposed
acquisition of Official Payments, services to be provided and their
anticipated results, statements regarding the development of and demand for
our services and other statements regarding matters that are not historical
facts. Such forward-looking statements involve risks and uncertainties;
consequently, actual results may differ materially from those expressed or
implied thereby. Factors that could affect actual results include risks
associated with the failure to obtain contracts and contract renewals; the
termination of projects or contracts by clients, which in general can be
terminated on short notice without cause; Official Payments' dependence on
a small number of clients for a large portion of its revenue, including one
government client that accounted for more than 60% of its 2001 revenues;
failure to meet, or meet on a timely basis, closing conditions necessary to
complete the proposed acquisition and merger; failure to achieve
anticipated gross margin levels with respect to acquisitions and individual
contracts; failure to realize anticipated cost savings and operational
efficiencies from restructuring and integrating Official Payments'
operations and staffing; revisions to mandated statutes including changes
to the timing of required compliance; adverse economic conditions in the
vertical and geographic markets that the Company serves; unanticipated
claims as a result of project performance; variations in the timing,
initiation or completion of client assignments; unanticipated costs
incurred in fixed-price projects and warranty periods; the Company's
ability to recruit, train and retain consultants and key personnel,
including Official Payments personnel; the Company's ability to effectively
manage growth and acquisitions; risks associated with rapid technological
advances and other risk factors listed from time to time in the Company's
filings and reports with the Securities and Exchange Commission, including
the Company's most recent Annual Report on Form 10-K for the year ended
September 30, 2001 and its most recent Quarterly Report on Form 10-Q. The
forward-looking statements contained in this press release are made as of
the date hereof, and the Company does not assume any obligation to update
these statements or the reasons why actual results could differ materially
from those projected in these statements.
Official Payments Safe Harbor Statement
Statements in this release are current only as of the time the release is
issued and may be deemed to contain forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and
section 21E of the Securities Exchange Act of 1934, as amended. Such
statements are based upon the current economic environment and current
expectations that involve risks and uncertainties, including, but not
limited to statements regarding the company's competitive position,
expected operating and financial performance, business model and expected
growth of electronic payments to government entities. All forward-looking
statements included in this report are based upon information available to
the company as of the date hereof. You are cautioned that these statements
are not guarantees of future performance. The company's actual results and
the timing of certain events may differ significantly than those
anticipated in, or caused by, any forward-looking statements as a result of
certain risks and uncertainties, including without limitation, consumer
utilization of the company's services, general economic and business
conditions, major systems failure, constraints in capacity, rapid
technological changes, ability to retain existing government contracts and
enter into new government contracts, competitive nature of the market in
which the company competes, pricing pressures, changes in laws and
regulations (including changes in the ability or predisposition of
government entities to accept direct payments by credit card) and the
continued development of the company's products. A more complete
description of these and other risks and uncertainties associated with, and
potential factors that could affect, the company's business can be found in
the company's filings with the United States Securities and Exchange
Commission, including its Annual Report on Form 10-K for the year ended
December 31, 2001. The company does not undertake any obligation to update
publicly any forward-looking statement in this release, or any statement
which was accurate at the time the release was issued, whether as a result
of new information, future events or otherwise. Official Payments
undertakes no responsibilities for forward-looking statements made by Tier
in this release.
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NOTE: The Tier logo and "Tier...Expect A Lot" are service marks of Tier
Technologies, Inc. Official Payments Corp. and the Official Payments Corp.
logo are service marks of Official Payments Corporation.
